Delphi to court: OK to cancel labor deals

GM to begin paying lower prices for parts

May 02, 2006|By From Tribune news services.

DETROIT — Auto parts supplier Delphi Corp. said in a court filing Monday that a federal bankruptcy court can immediately cancel its labor agreements instead of allowing Delphi to cancel them on its own, an action that could lead to a devastating strike.

Adding to Delphi's struggle, the auto supplier said General Motors Corp. will start paying lower prices for Delphi parts after it failed to reach a deal to continue paying higher rates to its main supplier.

GM had agreed to temporarily forgo price reductions after Delphi filed for bankruptcy in October, but the automaker will no longer do so, Delphi said in a filing with the Securities and Exchange Commission.

In a filing with the U.S. Bankruptcy Court, Delphi countered the unions' contention that wage cuts aren't necessary, saying it expects to lose $2 billion this year and $5 billion through 2010 unless changes are made.

"Under these projections, Delphi simply will not be able to continue to operate unless it can achieve significant modifications to its business," Delphi said in the filing.

Delphi filed a motion March 31 asking bankruptcy Judge Robert Drain to give it the authority to cancel its union contracts if it failed to reach an agreement to lower wages. Delphi's unions filed objections last month, and Delphi responded Monday. Drain is scheduled to consider Delphi's request on May 9.

Delphi said it believes Drain can give it the authority to reject its own labor agreements with 10 days' notice, but the United Auto Workers says that is illegal and would give Delphi too much bargaining power.

Delphi said it requested the authority to reject its own agreements because it believed it was in all parties' best interest to come to an agreement themselves. But Delphi said if Drain doesn't believe it should have that authority, he can modify Delphi's motion and cancel the contracts on his own.

The UAW and other unions representing Delphi's 33,000 U.S. hourly workers have threatened to strike if the contracts are rejected. A strike could have a serious effect on Delphi as well as GM, Delphi's former parent and largest customer.

Separately, a GM spokesman said the automaker has extended until June 23 a deadline for blue-collar workers to accept offers of buyouts and early retirements. GM workers were informed of the extension Monday, spokesman Dan Flores said. A UAW official said the deadline has also been extended for Delphi workers.

GM has offered either retirement or buyouts to all of its union workers. Delphi has made some of the same offers to employees who worked at GM before the parts supplier was spun off in 1999.